And now for the important paper stories for today:

Early Tuesday morning trading from Europe/Asia

1. Stocks mixed on major Asian bourses / the  yen  falls  to 118.59

1b Chinese yuan vs USA dollar/ yuan strengthens  to 6.1983
2 Nikkei down 110 points or .64%

3. Europe stocks in the green  /Euro falls/ USA dollar index up to 92.25/

3b WOW!!! Japan 10 year yield at .26% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.17/

3c Nikkei now slightly above 17,000

3e The USA/Yen rate well below the 120 barrier this morning/
3fOil: WTI 44.81 Brent: 45.85 /all eyes are focusing on oil prices. This should cause major defaults.

3g/ Gold up/yen down;

3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion

Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP

3i Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt (see Von Greyerz)

3j Oil falls this morning for both WTI and Brent

3k China to stimulate its economy by 1 trillion dollars worth of infrastructure/poor Chinese PPI numbers as their economy softens.

3l

3m Gold at $1240. dollars/ Silver: $16.93

3n USA vs Russian rouble:  ( Russian rouble down 3 roubles per dollar in value)  66.06!!!!!!

3 0  oil falls into the 44 dollar handle for WTI and 45 handle for Brent

3p  volatility high/commodity de-risking!/Europe heading into outright deflation including Germany/Germany has low unemployment/Italy very high unemployment (high jobless rate)/Germany bad factory order numbers/

3Q ECB still unsure of QE format weighs down European bourses

4. USA 10 yr treasury bond at 1.89% early this morning. Thirty year rate well below 3%  (2.47%!!!!)/yield curve flattens/foreshadowing recession
5. Details: Ransquawk, Bloomberg/Deutsche bank Jim Reid

(courtesy zero hedge)/your early morning trading from Asia and Europe)

Saudi Arabian Oil Minister Ali Al Naimi has asked why he should be responsible for cutting output while U.A.E. Energy Minister Suhail Al-Mazrouei said non-OPEC producers should reduce “irresponsible” production. How can that be? How can American production be ‘irresponsible’ in the land of the free (money). Well, as the following chart from Bloomberg shows, perhaps OPEC members have a point…

As Bloomberg’s Chart of the Day shows, crude production in the U.S. increased 75 percent over the past 5 years while output from the Organization of Petroleum Exporting Countries grew 5 percent.

Canada boosted supplies by 42 percent while Brazil pumped 24 percent more, according to data from New York-based Energy Intelligence Group.

“The biggest contributor to the glut has been the rising output in the U.S., which has driven up global supplies,” said Kang Yoo Jin, a commodities analyst in Seoul at NH Investment & Securities Co.

 

“OPEC producers can’t be completely free from taking the blame as they were the ones who let U.S. shale oil players enter the market by limiting supply and keeping oil at $100.”

*  *  *
However, what we find most intriguing is the inflection point in US production came at a coincidentally (because to claim causality would be ridiculous, right?) crucial time for the Federal Reserve as it went all in on unlimited open-ended money-printing which crashed the cost of funding for any and every project no matter how non-economic through-the-cycle.

Perhaps this post should be re-named “A Fed-Induced Mal-Investment Boom Busts In Real-Time”…

end

Here come the losses!!

(courtesy zero hedge)

First Of Many: Standard Chartered Hit By Billions In Losses From Commodity Crash

Now that even the pundit brigade has confessed that crashing crude may not be the “unambiguously good” event all of them had sworn as recently as a month ago it surely would be, and stocks are beginning to comprehend that plunging oil may well be rather “unambiguously bad” because without EPS growth (energy is well over 10% of S&P EPS), without multiple expansion (rumor has it the Fed will hike this year), without a jump in stock buybacks (energy companies account for 30% of the buyback growth in 2015 according to Goldman) and without a boost to GDP (energy capex plans are imploding), the only way is down. But there was one key element missing from the “bad” scenario: impaired banks. At least until now, because as Reuters reports, Asia-focused bank Standard Chartered is the first (of many) bank facing billions in losses resulting from the crude crash.

The bank, which recently has been on a firing spree and even exited its entire equity business, will likely need $4.4 billion of extra provisions to cover losses from commodities loans, potentially forcing it to raise billions of dollars from investors, analysts said on Monday.

From Reuters:

Credit Suisse analysts said the losses could force Standard Chartered to raise $6.9 billion to improve its core capital ratio to 11 percent by the end of the year. “We think the needed provisioning could be large enough to require further capital measures, such as further equity raising, and/or dividend reductions,” analyst Carla Antunes-Silva said in a note.

 

Standard Chartered’s shares were down 2.3 percent at 923 pence by 1330 GMT, the weakest major European bank.

There were previous hints, completely ignored by the markets of course, that things at this China-heavy bank are going from bad to worse: a jump in Standard Chartered’s bad debts in the third quarter has prompted concern that it could face heavy losses from commodities loans after the fall in the price of oil and commodities.

The loss could be lower…

Credit Suisse’s estimate was based on an “adverse” scenario that would see the bank need $4.4 billion to maintain its capital ratio, based on a potential $2.6 billion of pretax provisioning for commodities loans that sour and a higher risk-weighting on the loans.

Then again, considering that the “adverse” scenario in the ECB stress case didn’t even consider the current deflationary environment, the loss could be far higher. Which means capital raises are on deck, and logically Credit Suisse said the bank could announce a rights issue or cut the dividend at its 2014 results, due on March 4.

“We believe the last two years of de-rating have been driven largely by weaker revenue and that the asset quality deterioration leg is now setting in,” said Credit Suisse, maintaining its “underperform” rating on the stock. Analysts at JPMorgan and Jefferies also cut their target prices on the stock on Monday, saying that credit quality could deteriorate.

 

Standard Chartered CEO Peter Sands is under pressure after a troubled two years in which profits have fallen, halting a decade of record earnings. Some investors have said that Sands should go or the bank should set out succession plans.

One down: many more to go. Hopefully equity investors are as generous to all those other banks who will bestunned to learn they, too, need billions more in capital.

end

This will surely help with Canada’s GDP:

(courtesy zero hedge)

Suncor Cuts Capex By $1 Billion, Fires 1000, Implements Hiring Freeze

For all those who have forgotten that the I in the GDP equation stands for Investment, here is a reminder courtesy of the latest crude collapse victim, Suncor, which moments ago announced it is not only cutting its 2015 CapEx by $1 billion (as in I, directly and adversely impacting US GDP by the same amount) but that it would also cut “operating expenses” by up to $800 million, and,drumroll, implementing “a series of workforce initiatives that will reduce total workforce numbers in 2015 by approximately 1000 people, primarily through its contract workforce, in addition to reducing employee positions. There will also be anoverall hiring freeze for roles that are not critical to operations and safety.”

Or as Joe LaVorgna and all the other mainstay CNBC “analysts” would call it, “unambiguously good.”

From the press release:

Suncor Energy Inc. announced today significant spending reductions to its 2015 budget in response to the current lower crude price environment. The cuts include a $1 billion decrease in the company’s capital spending program, as well as sustainable operating expense reductions of $600 million to $800 million to be phased in over two years offsetting inflation and growth.

 

“Our integrated model and strong balance sheet have positioned us well for the price downturn,” said Steve Williams, president and chief executive officer. “Cost management has been an ongoing focus, with successful efforts to reduce both capital and operating costs well underway before the decline in oil prices. However, in today’s low crude price environment, it’s essential we accelerate this work. Today’s spending reductions are consistent with our commitment to spend within our means and maintain a strong balance sheet. We will monitor the pricing environment and take further action as required.”

 

Suncor is implementing a number of initiatives to achieve the cost reduction targets. These include deferral of some capital projects that have not yet been sanctioned, such as MacKay River 2 and the White Rose Extension, as well as reductions to discretionary spending. Budgets affecting the company’s safety, reliability and environmental performance have been specifically excluded from the cost reduction program.

 

Suncor has also implemented a series of workforce initiatives that will reduce total workforce numbers in 2015 by approximately 1000 people, primarily through its contract workforce, in addition to reducing employee positions. There will also be an overall hiring freeze for roles that are not critical to operations and safety.

 

Major projects in construction such as Fort Hills and Hebron will move forward as planned and take full advantage of the current economic environment. These are long-term growth projects that are expected to provide strong returns when they come online in late 2017.

 

Suncor has issued an update to its 2015 guidance to reflect, among other items, reduced spending and lower pricing and related assumptions. Production guidance for 2015 has not changed.

 

Suncor’s fundamental goals remain the same, with operational excellence, capital discipline and profitable growth remaining key to its business strategy. In fact, today’s announcement reflects the application of these principles, in the context of the current low price environment.

 

“The strategic decisions we’ve made are consistent with our unwavering focus on capital discipline and operational excellence,” said Williams. “We will continue to carefully manage our spending priorities: sustaining safe, reliable and environmentally responsible operations, providing a meaningful, competitive dividend for our shareholders and investing in profitable growth.”

Many, many more to go.

end

The following is a must read as Michael Snyder goes through the numbers and agrees what we have been telling you.  The globe has a massive short in the USA dollar of 9 trillion and much of those dollars purchased commodities like copper and oil.  The total commodities purchased this year is around 22 trillion dollars and now much of that is under water.  The powder keg has been lit…

a must read….

(courtesy Michael Snyder/Economic Collapse Blog)

Boom Goes The Dynamite: The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

By Michael Snyder, on January 12th, 2015

If you were waiting for a “black swan event” to come along and devastate the global economy, you don’t have to wait any longer.  As I write this, the price of U.S. oil is sitting at $45.76 a barrel.  It has fallen by more than 60 dollars a barrel since June.  There is only one other time in history when we have seen anything like this happen before.  That was in 2008, just prior to the worst financial crisis since the Great Depression.  But following the financial crisis of 2008, the price of oil rebounded fairly rapidly.  As you will see below, there are very strong reasons to believe that it will not happen this time.  And the longer the price of oil stays this low, the worse our problems are going to get.  At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before.  So let’s hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead.  Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic “experts” in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008.  You can see both crashes on the chart below…

If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.

But that didn’t happen, did it?  Instead, we plunged into the deepest recession that we have seen since the Great Depression.

And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.

Already, we are seeing oil rigs shut down at a staggering pace.  The following is from Bloomberg…

U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.

The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody’s Corp.

But that was just the beginning of the carnage.  61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.

For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs.  Just check out what is happening in Texas…

A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are “likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ,” said Oilpro Managing Director Joseph Triepke.

Unfortunately, this crisis will not just be localized to states such as Texas.  There are tens of thousands of small and mid-size firms that will be affected.  The following is from a recent CNBC report…

More than 20,000 small and midsize firms drive the “hydrocarbon revolution” in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation’s oil and gas output, according to the Manhattan Institute for Policy Research’s February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.

A sustained decline in prices could lead to layoffs at these firms, say experts. “The energy industry has been one of the job-growth areas leading us out of the recession,” said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. “In 2015, that changes in this price environment,” he said. “We’re probably going to see some job losses on a fairy significant scale if this keeps up.”

If the price of oil makes a major comeback, the carnage will ultimately not be that bad.

But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.

That would mean a junk bond crash unlike anything that Wall Street has ever experienced.

And as I have written about previously, a stock market crash almost always follows a junk bond crash.

These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.

Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.

At this point, industrial commodity prices have hit a 12 year low.  I am talking about industrial commodities such as copper, iron ore, steel and aluminum.  This is a huge sign that global economic activity is slowing down and that big trouble is on the way.

So what is driving this?  The following excerpt from a recent Zero Hedge article gives us a clue…

Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.

Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).

Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.

Unfortunately, starting in mid-2014, it did in a big way.

This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.

Once again, much of this could be avoided if the price of oil starts going back up substantially.

Unfortunately, that does not appear likely.  In fact, many of the big banks are projecting that it could go even lower…

Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.

“We’re going to keep on going lower,” says industry analyst Brian Milne of energy manager Schneider Electric. “Even with fresher new lows, there’s still more downside.”

OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this.  Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons…

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

The oil producing countries in the Middle East seem to be settling in for the long haul.  In fact, one prominent Saudi prince made headlines all over the world this week when he said that “I’m sure we’re never going to see $100 anymore.”

Never is a very strong word.

Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?

Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.

It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea…

Some of the world’s largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.

Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.

They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.

The fundamentals for the price of oil are so much worse than they were back in 2008.

We could potentially be looking at sub-$50 oil for an extended period of time.

If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.

So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.

end

In the afternoon we get word that the  Russia is to increase combat capabilities in the Crimea.  Russia also states that the Ukrainian conflict is worsening:

(courtesy zero hedge)

Russia To Increase ‘Combat Capabilities’ In Crimea, Sees Ukraine Conflict Worsening

Following the adoption of its new military doctrine signed by President Vladimir Putin in December which identifies NATO expansion as an external risk, it is perhaps hardly surprising that, as Reuters reports, Russia’s top general, Valery Garesimov stated that the “Defence Ministry will focus its efforts on increasing the combat capabilities of its units and increasing combat strength.. with special attention will be given to the groups in Crimea.” Amid renewed heavy shelling in Donetsk, NATO’s top military commander noted they will be stepping up exercises in the Baltic Sea region as Russian Deputy Foreign Minister Grigory Karasin warns,“the situation in eastern Ukraine is deteriorating.”

As Reuters reports,

Russia’s top general said on Tuesday he would beef up combat capabilities this year in Crimea, the Arctic and the country’s westernmost Kaliningrad region that borders two NATO states.

 

The remarks by General Valery Gerasimov, chief of the General Staff of the Armed Forces, are likely to deepen concern in the West over what it sees as Russia increasingly flexing its muscles since the start of the crisis in Ukraine.

 

“In 2015, the Defence Ministry will focus its efforts on increasing the combat capabilities of its units and increasing combat strength in accordance with the military development plans,” Gerasimov told Russian journalists.

 

“Special attention will be given to the groups in Crimea, the Kaliningrad region and the Arctic,” he was quoted as saying by Russian news agencies but gave no further details.

 

His remarks follow the adoption of a new military doctrine signed by President Vladimir Putin in December which underlines the need to protect Russia’s interests in the Arctic and identifies NATO expansion as an external risk.

 

…

 

Russia deployed 14 military jets to Crimea last November as part of a squadron of 30 that will be stationed there, making clear it intends to strengthen its presence on the peninsula since annexing it from Kiev last March.

And NATO is not standing still…

NATO’s top military commander, General Philip Breedlove, said the alliance was already looking at stepping up exercises in the Baltic Sea region in response to a rise in Russian military manoeuvres there late last year.

 

Breedlove warned at the time that Russia’s “militarization” of Crimea could be used to exert control over the Black Sea.

 

He said on Tuesday NATO was considering adapting a programme of military exercises in the Baltic Sea region, where he said Russian activities had changed in character and showed capabilities not seen before.

 

“The first series of changes will not be an increase in number but they will be to group them together … to better prepare our forces and to allow nations to work together as a NATO force, but we are looking at increasing some exercises,” he said at a NATO base at Szczecin in northwest Poland.

 

NATO has boosted its military presence in eastern Europe, saying it has evidence Russia orchestrated and armed the rebellion in eastern Ukraine last year that followed the overthrow of a Kremlin-backed president in Kiev.

And Bloomberg confirms, Russian Foreign Ministry Sees Ukraine Conflict Worsening

Situation in eastern Ukraine is deteriorating, RIA Novosti reports, citing Russian Deputy Foreign Minister Grigory Karasin.

It’s time for Ukraine govt to make decisions: Karasin

And as the following live feed and clips suggest, he is not wrong…

Overnight attacks…

Live Feed (following the “leave Doetsk Airport Or Die” Threats…

*  *  *

Ironically, this increased sbare-rattling comes at a time when Dow Jones reports what appears like Europe’s continued efforts at detente with Russia…

The European Union could significantly scale back sanctions and resume discussions with Russia on issues from visa-free travel, co-operation with the Moscow-led Eurasian Economic Union and the crisis in Libya, Syria and Iraq if Russia moves to end the crisis in eastern Ukraine, according to an EU discussion paper.

 

While insisting the EU cannot return to “business as usual” with Moscow, the papersuggests the EU consider gradually normalizing many aspects of its ties with Russia in what would be a significant shift in relations. It says that would depend on Moscow fully implementing the peace and cease-fire deals it signed with Ukraine, standing by its gas-supply agreement with Ukraine and throwing no fresh wrenches in the way of the EU-Ukraine trade and political pact.

 

The paper, which has not yet been sent to member states, was prepared by the EU’s foreign-policy arm ahead of a meeting of the bloc’s foreign ministers on Monday in Brussels. No immediate decisions are expected from that meeting where the EU’s medium-term approach to Russia is the main item on the agenda. EU energy chief Maros Sefcovic will visit Moscow on Wednesday for discussions with top officials from the government and the state gas company Gazprom.

*  *  *

Just when you thought it was all over…

end

We get the following story from Tass where Kiev is ready to seize private cars for army needs.

This is not good…

(courtesy Tass and special thanks to Robert H for sending this to us):

Ukraine to seize cars owned by businessmen for army needs

January 13, 16:38 UTC+3 KIEV
The number of vehicles subject to mobilization has been set by the country’s cabinet of ministers

© ITAR-TASS/Maxim Nikitin

Read also

Donetsk Republic’s military: Mobilization wave in Ukraine is provocation against civilians

KIEV, January 13. /TASS/. Apart from people, Ukraine plans to mobilize cars owned by both businessmen and state enterprises for the needs of the military in Donbas, a senior official at the mobilization planning directorate of the General Staff said on Tuesday.

“We are planning on seizing transport vehicles and equipment during the next mobilization waves which will be sent to special centers in Ukraine and also engineer bases so that we can accept this equipment, carry out maintenance and then send it for accomplishing tasks,” Maj. Gen. Volodymyr Talalai told reporters.

The number of vehicles subject to mobilization has been set by the country’s cabinet of ministers.

Local media reports said the Ukrainian authorities are primarily interested in SUVs, pickups and minivans.

“The equipment is seized free of charge but in case it is destroyed during the armed actions the state will have to pay the damages,” Talalai said.

The plans have been announced ahead of the fourth mobilization wave in Ukraine which begins on January 20, while another two campaigns are planned to be carried out in April and June. Some 50,000 people are due to be mobilized.

end

As we explained yesterday the Ukraine has only 7.5 billion USA as official reserves or about 5 weeks of imports.  The USA states that it will give them 2 billion USA in aid.  However, we would expect Russia to intercede by saying that Ukraine has broken its covenants (total debt not to exceed 60% of GDP) and accelerate its 3 billion USA loan back.  Russia advanced 3 billion USA to purchase bonds. They can force early repurchase of these bonds if that covenant is broken:

more fun and games..

(courtesy zero hedge)

With Ukraine Default Risk At 6 Year Highs, US Taxpayers “Volunteer” To Guarantee Its Debt

With the huge fall in the price of oil today, the Russian rouble fell to the 66 handle.  With the fall in the rouble, Russian steel will now have a big competitive advantage over the big Indian steel industry.

(courtesy zero hedge)

The Russian Ruble is re-crashing again today (higher by 3 handles and back above 66 RUB to the USD) as crude oil continues to plumb new depths. Having found some strength – via intervention amid ‘stability’ in crude prices in late December – the selloff since Christmas has been dramatic in both the Ruble and Crude. However, the contagious impact of this massive Ruble devaluation is, as Bloomberg reports, making life tougher for India’s steelmakers. “In the past month or so,deals have been struck for steel imports from Russia,” notes one steel industry executive, adding that such purchases “will only increase,” as lower Russian prices “will be a threat to Indian steel mills.”

Ruble re-crashes as crude carnage continues

As Bloomberg reports, the rout in Russia’s ruble is making life tougher for Indian steelmakers…

Some local buyers are turning to Russian alloy instead after the past year’s 49 percent plunge in the ruble — the world’s steepest — made the nation’s exports cheaper.

 

“In the past month or so, deals have been struck for steel imports from Russia,” said JSW Steel’s Mumbai-based Senior Vice President Sharad Mahendra, referring to users and traders of the alloy. Such purchases “will only increase,” he said.

 

India’s overseas markets such as the Middle East also may turn to more Russian steel, adding to existing competition from Chinese shipments.

 

…

 

Russian companies can offer discounts on the Indian hot rolled steel price, which is $550-$600 a ton, said Mumbai-based Niraj Shah, founder of steelanalyst.com, who specializes in Russia and India.

 

“Apart from shipping steel to India, Russia will also look to sell to markets where India exports,” Shah said, adding sanctions are discouraging demand in parts of Europe. The first Russian steel may arrive in India next month, he said.

And this is a problem as expectations for India’s steel industry are high…

Indian steelmakers raised output targets for the year ending March 31, 2015. Modi made higher investment and better infrastructure key priorities after sweeping to office in May. His government plans to make India a global manufacturing hub.

 

…

 

Domestic steel producers may have to “lower prices if they want to sell more,”according to New Delhi-based A.S. Firoz, chief economist at the Steel Ministry’s economic research unit.

 

…

 

“This will be a threat to Indian steel mills,” he said.

 

India’s total imports of the alloy exceeded 6.5 million metric tons in the nine months through December. That’s 1 million tons more than the year ended March 31, 2014, official data show.

 

The nation may become a net importer of 3 million tons after being a net exporter last year

*  *  *
It’s a non-linear world after all…

end

Obama seeks more authorization for military force against ISIS:

(courtesy zero hedge)

“Boots On The Ground”? Obama To Seek Authorization For Military Force Against ISIS

Having unveiled his non-boots-on-the-ground strategy in September, President Obama’s “promise” was quickly proved fragile when General Martin Dempsey, the chairman of the joint chiefs of staff, indicated to the House of Representatives armed services committee that the strength of ISIS relative to the Iraqi army may be such that he would recommend abandoning Obama’s oft-repeated pledge against returning US ground troops to combat in Iraq. It seems another promise is about to be broken as Bloomberg reports Senator John Cornyn said President Obama told congressional leaders during meeting today at White House he would seek authorization for military force on Islamic State. Boehner’s office, in separate statement after meeting, said Republicans would work with him to build support.

As Bloomberg reports, Obama to Seek Authorization for Military Force

President Obama told congressional leaders during meeting today at White House he would seek authorization for actions on Islamic State, Republican Sen. John Cornyn tells reporters.

 

No details on timing or substance

 

Cornyn, fellow Republican Sen. John Thune say Obama’s intention is good development, may help smooth way for confirmation of Ashton Carter as next defense secretary

 

House Speaker John Boehner, other Republicans have been pressing Obama to seek authorization

 

Boehner’s office, in separate statement after meeting, said he encouraged Obama to send Congress the authorization and said Republicans would work with him to build support

So what can we expect? (as we noted previously)…

As The Guardian reports,

General Martin Dempsey, the chairman of the joint chiefs of staff, indicated to the House of Representatives armed services committee that the strength of Isis relative to the Iraqi army may be such that he would recommend abandoning Obama’s oft-repeated pledge against returning US ground troops to combat in Iraq.

 

Retaking the critical city of Mosul, Iraq’s second largest, and re-establishing the border between Iraq and Syria that Isis has erased “will be fairly complex terrain” for the Iraqi security forces that the US is once again supporting.

 

“I’m not predicting at this point that I would recommend that those forces in Mosul and along the border would need to be accompanied by US forces, but we’re certainly considering it,” Dempsey said.

And, as The Daily Star adds,

Iraq will need about 80,000 effective military troops to retake the terrain it lost to Islamic State militants and restore its border with Syria, the top U.S. general said on Thursday.

 

“We’re going to need about 80,000competent Iraqi security forces to recapture territory lost, and eventually the city of Mosul, to restore the border,” Army General Martin Dempsey, the chairman of the Joint Chiefs of staff, told a congressional hearing.

*  *  *

It appears some folks are going to be putting their boots on the ground…

end

And now for our other hot spot in our global financial mess:  Greece

(courtesy zero hedge)

Next Greek Premier Says Economic Data “Shamefully Embellished” To Look Better

The Greek general election is just around the corner, and as expectations for a Greek overhaul, if not outright Grexit, rise so does the rhetoric by the man who, barring an act of god or Diebold, will be the next Greek premier: Alexis Tsipras, who some see as the catalyst for a Grexit, while others describe as merely yet another apparatchik of the Troika. Overnight Tsipras wrote an op-ed article in Germany’s Handelsblatt newspaper, summarized by Bloomberg, in which he said the notion that Greece’s economy has stabilized is an “arbitrary distortion of the facts.” He said that while the economy grew 0.7 percent in the third quarter, the recession isn’t over because of 1.8% deflation.

Psst: whatever you do, don’t call it deflation. “Negative Inflation” is the preferred nomenclature, or better yet: “Joyflation.”

Some of his other pearls: “We’re facing a shameful embellishment of the statistics to justify the effectiveness of troika policies.”

Clearly writing to a German audience, Tsipras said that “German taxpayers have nothing to fear from a Syriza government. Our goal is not to seek confrontation with our partners, more credits or a blank check for new deficits.”

So what exactly is his goal, aside from promising lower taxes and other things which the Greek government will be unable to achieve absent a surge in external funding, especially now, as we explained before, the Greeks have stopped paying their taxes entirely in advance of the elections?

“The truth is that Greece’s debt cannot be repaid as long as our economy is subjected to constant fiscal waterboarding,” Tsipras said in Handelsblatt.

Sorry, the truth is that Greek debt cannot be repaid, period.

end

Your more important currency crosses early Tuesday morning:

Eur/USA 1.1789 down .0041

USA/JAPAN YEN 118.59  up 246

GBP/USA 1.5168 down .0003

USA/CAN 1.1965 down .0004

This morning in Europe, the euro continues on  its  downward spiral, trading  down  and now well below the 1.18 level at 1.1789 as Europe reacts to deflation, and  announcements of massive stimulation.    In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31.  He now wishes to give gift cards to poor people in order to spend. The yen continues to trade in yoyo fashion.  This morning it settled down in Japan by 25 basis points and settling still well below the 120 barrier to 118.59 yen to the dollar.  The pound was down this morning as it now trades just above the 1.51 level at 1.5168.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation/Dec  12 a new separate criminal investigation on gold,silver oil manipulation). The Canadian dollar is slightly up today trading at 1.1965 to the dollar. It seems that the three major global carry  trades are being unwound. (1) The total dollar global short is 9 trillion USA, and as such we now witness a sea of red blood on the streets as derivatives blow up with the massive rise in the dollar against all paper currencies.We also have the second big yen carry trade unwind as the yen refuses to blow past the 120 level.(3) the Nikkei vs gold carry trade as the Nikkei now collapses causing those short gold to purchase our scarce physical yellow metal. These massive carry trades are causing deflation as the world reacts to a lack of demand. Europe is even considering the “helicopter route” in providing cash to all citizens (around 3,000 Euros per person)

Early Tuesday morning USA 10 year bond yield: 1.89% !!!  down 2  in basis points from Monday night/

USA dollar index early Tuesday morning: 92.25  up 29 cents from Monday’s close

The NIKKEI: Tuesday morning : down 110 points or 0.64%

Trading from Europe and Asia:
1. Europe stocks all in the green.

2/ Asian bourses mixed … Chinese bourses: Hang Sang in the green ,Shanghai in the green,  Australia in the red: /Nikkei (Japan) red/India’s Sensex in the red/

Gold early morning trading: $1240

silver:$16.73

Closing Portuguese 10 year bond yield: 2.66% up 5 in basis points from Monday

Closing Japanese 10 year bond yield: .27% !!! down 1 in basis points from Monday

Your closing Spanish 10 year government bond, Tuesday  flat in basis points in yield from Monday night.

Spanish 10 year bond yield: 1.64% !!!!!!
Your Tuesday closing Italian 10 year bond yield: 1.82% up 1 in basis points from Monday:

trading 18 basis points higher than Spain:

IMPORTANT CLOSES FOR TODAY

Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond:

Euro/USA: 1.1764  down .0068

USA/Japan: 117.73 down .607

Great Britain/USA: 1.5148 down .0022

USA/Canada: 1.1966 down .0003

The euro again reversed course in the southbound direction  in value during the afternoon and by closing time , finishing down by .0068 and  well below the 1.18 level to 1.1764. The yen was well up in the afternoon, and it was up by closing  to the tune of 61 basis points and closing well below the 118 cross at 117.73 still causing much grief again to our yen carry traders who need a much lower yen. The British pound lost some  ground  during the afternoon session but it was  down  on the day closing at 1.5148. The Canadian dollar was up in the afternoon and was up on the day at 1.1966 to the dollar.

As explained above, the short dollar carry trade is being unwound, the yen carry trade and now the Nikkei/gold carry trade and these unwinding are  causing massive derivative losses. And as such. these massive derivative losses is the powder keg that will destroy the entire financial system.

Your closing USA dollar index: 92.32 up 33 cents from Monday.

your 10 year USA bond yield , down 2  in basis points on the day: 1.89%!!!!

European and Dow Jones stock index closes:

England FTSE  up 40.78 points or 0.63%

Paris CAC up 62.04 or 1.47%

German Dax  up 159.10 or 1.63%

Spain’s Ibex  up  168.50 or 1.72%

Italian FTSE-MIB up 359.78 or 1.72%

The Dow: down 27.16. or 0.15%

Nasdaq; down 3.21 or 0.07%

OIL: WTI 46.44 !!!!!!!

Brent: 46.99!!!!

Closing USA/Russian rouble cross: 65.60  down 2 3/4 roubles per dollar on the day.

And now for your more important USA economic stories for today:

(Your trading today from the New York):

Volatility Storms Back With A Vengeance In 950 Point Intraday Dow Swing

This feels very appropriate today…

It started with an overnight meltup run that tried to get stocks green for 2015 – perhaps on the back of ‘stability’ in crude and better than expected trade data in China as well as ECB QE. But that early exuberance disappeared almost instantly…

Homebuilders (well KB Home) are being pegged as the catalyst for breaking the market today as it shattered the early short-squeeze dreams that housing is coming back miraculously…  (but we suspect Buba comments and Dow hitting YTD green briefly were just as responsible)

Dow Futures saw an 950-point-plus intraday swing…

On the week, Trannies – it appears – now no longer like low oil prices…

Year-to-date… We suspect this is more likely the catalyst for today’s drop – The Dow and Nasdaq ramped back into the green for the year and met selling pressure…

Early exuberance in stocks was ignited by USDJPY (which – just as it did yesterday – roundtripped rather painfully – fun-durr-mentals…

As Stocks caught down to bonds (who could have guessed!!?))

and Credit…

The selloff post-weak 10Y Auction is dwarfed by the day’s swings…

JPY strength was the most notable move today as The USDollar rallied into the US Open then flatlined…

Commodities were mixed with Copper really ugly, silver up and gold flat – oil dipped and ripped…

Year-to-date… Copper is catching down tro crude’s crash…

With Crude lifting into tomorrow’s OPEX…

KB Home dropped the ball and admitted things weren’t entirely awesome…

Camera-On-A-Stick was smashed lower on AAPL patents for “a camera-like-thing-on-a-stick-like-thing”

Overnight we remain congiscent of Europe’s OMT decision (around 4amET)…

Charts: Bloomberg